BURLINGTON NORTHERN SANTA FE SALARY EXCHANGE OPTION PROGRAM
1. Authority to Adopt. This program (the 'Program') has been adopted by
the Compensation Committee (the 'Committee') of the Board of Directors of
Burlington Northern Santa Fe Corporation (the 'Company') pursuant to its
authority to promulgate rules for the administration and operation of the
Burlington Northern Santa Fe 1999 Stock Incentive Plan (the 'Plan') for
non-qualified stock option grants. This Program is effective January 1,
2. Purpose. The purpose of this Program is to enable the Committee and its
designated representatives to grant stock option awards ('Exchange Option
Grants') to key employees in exchange for the employees' elective reduction
of compensation otherwise payable to them, including cash compensation and
other forms of compensation designated by the Committee ('Elective
3. Eligibility. The Committee shall designate key employees or classes of
eligible employees (the 'Eligible Participants') who shall be eligible to
receive an Exchange Option Grant in exchange for foregoing Elective
4. Amount of Elective Compensation. Unless the Committee shall designate
another amount of Elective Compensation as to any Eligible Participant,
each Eligible Participant may elect to exchange all or any portion of the
following element of compensation for an Exchange Grant:
Up to 25% of such Eligible Participant's annual base salary for a
calendar year up to three consecutive calendar years, to be deducted
ratably with a minimum election of $5,000 for any calendar year.
5. Method of Election. Unless the Committee shall designate another time or
times for making an election to forego receiving Elective Compensation and
subject to Section 7 herein, an Eligible Participant who wishes to receive
an Exchange Option Grant (an 'Electing Participant') must deliver to the
Vice President - Human Resources, a written irrevocable election in a form
acceptable to the Senior Vice President Law & Chief of Staff of Burlington
Northern Santa Fe Corporation specifying the amount of Elective
Compensation the Electing Participant wishes to forego (the 'Canceled
Compensation'), not later than the date established by the Committee from
time to time or December 31 of the year prior to the year in which the
compensation is earned.
6. Date of Grant. For elections filed in accordance with paragraph 5 prior to
December 1, 1999, and unless otherwise determined by the Committee, the
Exchange Grant will be issued January 1 of the year in which the Canceled
Compensation is to be earned. For elections filed in accordance with
paragraph 5 after December 1, 1999, and unless otherwise determined by the
Committee, the Exchange Grant will be issued January 1 of the year in which
the Canceled Compensation is to be earned; provided that if the grant is in
exchange for Canceled Compensation otherwise payable over a period of more
than one year, then the Exchange Grant shall be issued on the first day of
the multiple-year period.
7. Terms of Grant. Each Exchange Option Grant shall be granted at the Fair
Market Value as defined in the Burlington Northern Santa Fe 1999 Stock
Incentive Plan on the date of grant in an amount equal to 450 option shares
for each $1,000 of Canceled Compensation. Such Exchange Option Grants
shall become exercisable one year from the date of grant; provided that in
the event of an election to forego compensation for multiple years, such
Exchange Option Grant shall become exercisable ratably over the number of
years for which an election is made beginning one year from date of grant
based upon the Canceled Compensation for each year divided by the total
amount of Canceled Compensation. Such options shall have a term of ten
years and shall be subject to the terms and conditions of the Burlington
Northern Santa Fe 1999 Stock Incentive Plan. In the event a participant
wishes to terminate an election that was filed in accordance with paragraph
5 prior to December 1, 1999, he or she may do so in respect to Elective
Compensation for all future calendar years covered by such election, and
such portion of the Exchange Option Grant related to such compensation
shall be immediately forfeited; provided that no such termination shall be
permitted with respect to elections filed in accordance with paragraph 5
after December 1, 1999.
8. Reloads. Reload options are hereby granted to senior executives and to
individuals in Salary Band 36 and above in respect to Exchange Option
Grants, subject to the terms and conditions of the Plan, in respect to
options granted under current or predecessor plans of the Company or its
affiliates; provided a) that only two reloads on each option grant is
permitted; b) that reloads are only available to current and actively
employed individuals at the time of exercise of the Exchange Option Grant;
and c) that reload rights are transferable to the same extent as option
9. Committee Discretion. Notwithstanding anything else contained herein to
the contrary, the Committee shall have the right, prior to the grant date,
to override an election in whole or in part. If the Committee overrides an
election in whole or in part, the Company shall reinstate the amount of the
Canceled Compensation related thereto.
10. Unvested Stock Options.
a) In the event that a participant with an Exchange Option Grant resigns
or is terminated for Cause, the full amount of the Exchange Option Grant
shall be forfeited.
b) In the event that a participant with an Exchange Option Grant dies, all
restrictions shall lapse and the full amount of the Exchange Option Grant
shall be exercisable.
c) In the event that a participant with an Exchange Option Grant
terminates due to Disability, Retirement or is involuntarily terminated by
the Company other than for Cause, any portion of the outstanding award that
is not exercisable shall be vested to the extent compensation for such
options has been foregone and the award shall remain exercisable in
accordance with the terms and limitations of the Plan.
d) The Change in Control provisions set forth in the Plan shall apply to
all grants of stock options issued pursuant to this Program or as such
Change in Control provisions may be modified by the Committee in its sole
discretion prior to the date of an Exchange Option Grant, but in no event
shall these Exchange Option Grants be available under any Change in Control
agreement that has become effective prior to the date of a grant hereunder.
11. Grant Terms. The grant shall be issued from authorized, but unissued
shares or from treasury shares.
12. Amendments. This Program may be amended or terminated at any time and from
time to time by resolution of the Committee.
As Amended 1/20/99